Cinedigm Corp. (NASDAQ: CIDM) today announced its financial results
for the three- and six-month periods ended September 30, 2019.
Key Second Quarter FY 2020 Financial
Results:
- Consolidated revenues were $10.2 million
- Overall OTT/streaming revenues were $3.1 million, up 35%
year-over-year
- Strong OTT Channel revenues, particularly Advertising Video on
Demand (AVOD) revenues, drove the majority of this growth.
- Net loss to common stockholders of $3.2 million, an improvement
of 11% year-over-year
- Adjusted EBITDA of $1.4 million
- Debt has been reduced $8.3m in the quarter and $13.6m year to
date
Key Business Highlights*:
- Expanded strategic alliance with Starrise Media to release
films in China theatrically, via broadcast television and to
digital platforms.
- Reached an estimated 4.5 million monthly active ad-supported
viewers across Cinedigm’s digital networks distributed via linear
Free Ad-supported TV (FAST) and AVOD viewers in September 2019, up
77% since the beginning of the fiscal year.
- Achieved over 398%** YoY growth of ad-supported viewer base
across FAST and ad-supported video on demand platforms.
- Reached approximately 2.7 million monthly active viewers across
five live networks with FAST linear channel delivery.
- Reached approximately 1.8 million monthly active viewers across
four live channels on partners with AVOD channel delivery.
- Increased highly valuable, connected TV ad requests to 83% of
overall inventory mix.
- Added five new ad demand partners.
- Added key scale distribution partners including Sinclair
Broadcast Group, Samsung, Comcast Xfinity, Roku, and Vizio in the
fiscal year.
- Launched Chinese entertainment channel BAMBU as a linear
channel on its widely-popular CONtv digital network
- Co-Productions continue to generate strong return on
investment: The Outsider starring Trace Atkins, Jon Foo, Danny
Trejo from Status Media, was released Day and Date on 6/14/19 and
on DVD 8/6/19. Its performance exceeded DVD Budget by 50% and
yielded strong transactional revenue and a Netflix exclusive
license.
- Released two co-productions in the first half of the Fiscal
Year and will release four in the second
half. Badland starring Trace Adkins, Mira Sorvino,
Bruce Dern and Tony Todd from Papa Octopus released 11/1/19 as a
Day & Date with optimal home page placement and promotion.
“We remain focused on growing our OTT/streaming
revenues and building on our position in the rapidly expanding
video-on-demand business by increasing our distribution assets and
increasing our volume of premium content rights to reach more
viewers and appeal to a wide range of advertising and distribution
partners,” said Chris McGurk, Cinedigm Chairman and CEO. “Just as
important, we are diligently managing our cost structure as we
approach the contractual end of our cinema equipment business with
the sale of cinema equipment to our theater partners.”
Second Quarter Fiscal 2020 Financial
Summary (comparing the quarter ended September 30, 2019 vs.
September 30, 2018)
Revenue was $10.2 million, a decrease of 25.5%
compared to $13.7 million in the prior-year second fiscal quarter,
due mainly to the expected decline in the Cinema Equipment
business. Overall OTT/streaming revenues were $3.1 million in the
quarter, up 35%, with OTT Channel revenues, particularly AVOD,
showing the strongest growth rate both for the quarter and year to
date.
Total operating expenses were $11.3 million,
compared to $14.6 million, a decrease of $3.3 million, or 22.6%,
which was primarily driven by lower selling, general and
administrative expenses and lower depreciation and amortization.
Selling, general and administrative expenses for the second quarter
of fiscal 2020 were $5.0 million compared to $6.5 million in the
year ago period, a decrease of $1.5 million, or 23.1%. Amortization
of intangible assets was $594,000 for the second quarter of fiscal
2020 compared to $1.4 million in the year ago period, a decrease of
$800,000, or 57.4%.
The Company reported a net loss of $3.1 million
for the second quarter of fiscal 2020 compared to a net loss of
$3.5 million in the second quarter of fiscal 2019. After giving
effect to preferred stock dividends of $89,000, the net loss to
common stockholders was $3.2 million, or ($0.08) per basic and
diluted share, based on a weighted average of 41,439,520 shares
outstanding. In comparison, for the second quarter of 2018, after
giving effect to preferred stock dividends of $89,000, a net loss
to common stockholders was $3.6 million, or ($0.09) per basic and
diluted share based on a weighted average of 37,696,256 shares
outstanding.
For the second quarter of fiscal year 2020,
Adjusted EBITDA was $1.4 million, compared to $2.9 million in the
year-ago period. The decrease was largely due to the expected
reduction in the cinema equipment business.
*All figures based on September 2019 performance
data.** YoY comparisons are between September 2018 and September
2019
Adjusted EBITDA is defined by the Company for
the periods presented to be earnings before interest, taxes,
depreciation and amortization, other income, net, goodwill
impairment, litigation related expenses and recoveries, stock-based
compensation, expenses, restructuring, transition and acquisitions
expenses, net, and certain other items. Pursuant to the
requirements of Regulation G, the Company has provided a
reconciliation in the tables attached to this release of loss from
continuing operations calculated in accordance with accounting
principles generally accepted in the United States of America
(“GAAP”) to Adjusted EBITDA. Adjusted EBITDA is not a measurement
of financial performance under GAAP and may not be comparable to
other similarly titled measures of other companies. The Company
calculated and communicated Adjusted EBITDA in the tables because
the Company's management believes it is of importance to investors
and lenders by providing additional information with respect to the
performance of its fundamental business activities. Management
presents Adjusted EBITDA because it believes that Adjusted EBITDA
is a useful supplement to net loss as an indicator of operating
performance. Management also believes that Adjusted EBITDA is an
industry-wide financial measure that is useful both to management
and investors when evaluating the Company's performance and
comparing our performance with the performance of our competitors.
Management also uses adjusted EBITDA for planning purposes, as well
as to evaluate the Company's performance because it believes that
adjusted EBITDA more accurately reflects the Company's results, as
it excludes certain items, such as stock-based compensation
charges, that management believes are not indicative of the
Company's operating performance. The Company believes that Adjusted
EBITDA is a performance measure and not a liquidity measure.
Adjusted EBITDA should not be considered as an alternative to
operating or net loss as an indicator of performance or as an
alternative to cash flows from operating activities as an indicator
of cash flows, in each case as determined in accordance with GAAP,
or as a measure of liquidity. In addition, adjusted EBITDA
does not take into account changes in certain assets and
liabilities as well as interest and income taxes that can affect
cash flows. The Company's calculation of Adjusted EBITDA may or may
not be consistent with the calculation of this measure by other
companies in the same industry. Investors should not view Adjusted
EBITDA as an alternative to the GAAP operating measure of net
income (loss). In addition, Adjusted EBITDA does not take into
account changes in certain assets and liabilities as well as
interest and income taxes that can affect cash flows. Management
does not intend the presentation of these non-GAAP measures to be
considered in isolation or as a substitute for results prepared in
accordance with GAAP. These non-GAAP measures should be read only
in conjunction with the Company's consolidated financial statements
prepared in accordance with GAAP.
About Cinedigm
Since inception, Cinedigm (NASDAQ: CIDM) has
been a leader at the forefront of the digital transformation of
content distribution. Adapting to the rapidly transforming business
needs of today’s entertainment landscape, Cinedigm remains a
change-centric player focused on providing content, channels and
services to the world’s largest media, technology and retail
companies. Cinedigm’s Content and Networks groups provide original
and aggregated programming, channels and services that entertain
consumers globally across hundreds of millions of devices. For more
information, visit www.cinedigm.com.
[CIDM-E]
Safe Harbor Statement
Investors and readers are cautioned that certain
statements contained in this document, as well as some statements
in periodic press releases and some oral statements of Cinedigm
officials during presentations about Cinedigm, along with
Cinedigm's filings with the Securities and Exchange Commission,
including Cinedigm's registration statements, quarterly reports on
Form 10-Q and annual report on Form 10-K, are "forward-looking''
statements within the meaning of the Private Securities Litigation
Reform Act of 1995 (the "Act''). Forward-looking statements include
statements that are predictive in nature, which depend upon or
refer to future events or conditions, which include words such as
"expects," "anticipates,'' "intends,'' "plans,'' "could," "might,"
"believes,'' "seeks," "estimates'' or similar expressions. In
addition, any statements concerning future financial performance
(including future revenues, earnings or growth rates), ongoing
business strategies or prospects, and possible future actions,
which may be provided by Cinedigm's management, are also
forward-looking statements as defined by the Act. Forward-looking
statements are based on current expectations and projections about
future events and are subject to various risks, uncertainties and
assumptions about Cinedigm, its technology, economic and market
factors and the industries in which Cinedigm does business, among
other things. These statements are not guarantees of future
performance and Cinedigm undertakes no specific obligation or
intention to update these statements after the date of this
release.
For more information: Jill
Newhouse Calcaterra Cinedigm
jcalcaterra@cinedigm.com 310-466-5135
CINEDIGM CORP.CONDENSED CONSOLIDATED
BALANCE SHEETS(In thousands, except for share and per
share data)
| |
|
|
|
| |
September 30,2019 |
|
March 31,2019 |
|
ASSETS |
(Unaudited) |
|
|
| Current assets |
|
|
|
|
Cash and cash equivalents |
$ |
13,665 |
|
|
$ |
17,872 |
|
|
Accounts receivable, net |
36,921 |
|
|
41,765 |
|
|
Inventory, net |
607 |
|
|
673 |
|
|
Unbilled revenue |
1,148 |
|
|
1,504 |
|
|
Prepaid and other current assets |
9,200 |
|
|
6,109 |
|
| Total current assets |
61,541 |
|
|
67,923 |
|
|
Restricted cash |
1,000 |
|
|
1,000 |
|
|
Property and equipment, net |
10,913 |
|
|
14,047 |
|
|
Right-of-use assets |
1,940 |
|
|
— |
|
|
Intangible assets, net |
8,097 |
|
|
9,686 |
|
|
Goodwill |
8,701 |
|
|
8,701 |
|
|
Other long-term assets |
291 |
|
|
526 |
|
| Total assets |
$ |
92,483 |
|
|
$ |
101,883 |
|
|
LIABILITIES AND DEFICIT |
|
|
|
| Current liabilities |
|
|
|
|
Accounts payable and accrued expenses |
$ |
75,230 |
|
|
$ |
71,751 |
|
|
Current portion of notes payable, including unamortized debt
discount of $979 and $1,436 respectively |
36,690 |
|
|
43,319 |
|
|
Operating lease liabilities |
915 |
|
|
— |
|
|
Current portion of deferred revenue |
1,869 |
|
|
1,687 |
|
| Total current liabilities |
114,704 |
|
|
116,757 |
|
|
Notes payable, non-recourse, net of current portion and unamortized
debt issuance costs and debt discounts of $1,141 and $1,495
respectively |
12,973 |
|
|
19,132 |
|
|
Operating lease liabilities, noncurrent |
1,103 |
|
|
— |
|
|
Deferred revenue, net of current portion |
1,700 |
|
|
2,357 |
|
|
Other long-term liabilities |
153 |
|
|
205 |
|
|
Total liabilities |
130,633 |
|
|
138,451 |
|
| |
|
|
|
| Stockholders’ deficit |
|
|
|
| Preferred stock, 15,000,000
shares authorized; Series A 10% - $0.001 par value per share; 20
shares authorized; and 7 shares issued and outstanding at September
30, 2019 and March 31, 2019. Liquidation preference of $3,648 |
3,559 |
|
|
3,559 |
|
| Common stock, $0.001 par
value; Class A stock 60,000,000 shares authorized at September 30,
2019 and March 31, 2019; 41,003,572 and 36,992,433 shares issued
and 39,689,736 and 35,678,597 shares outstanding at September 30,
2019 and March 31, 2019, respectively |
40 |
|
|
36 |
|
| Additional paid-in
capital |
375,222 |
|
|
368,531 |
|
| Treasury stock, at cost;
1,313,836 Class A common shares at September 30, 2019 and March 31,
2019 |
(11,603 |
) |
|
(11,603 |
) |
| Accumulated deficit |
(404,120 |
) |
|
(395,814 |
) |
| Accumulated other
comprehensive income |
38 |
|
|
10 |
|
| Total stockholders’ deficit of
Cinedigm Corp. |
(36,864 |
) |
|
(35,281 |
) |
| Deficit attributable to
noncontrolling interest |
(1,286 |
) |
|
(1,287 |
) |
| Total deficit |
(38,150 |
) |
|
(36,568 |
) |
| Total liabilities and
deficit |
$ |
92,483 |
|
|
$ |
101,883 |
|
| |
|
|
|
|
|
|
|
CINEDIGM CORP.CONDENSED
CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)(In thousands,
except for share and per share data)
| |
|
|
|
| |
Three Months EndedSeptember 30, |
|
Six Months EndedSeptember 30, |
| |
2019 |
|
2018 |
|
2019 |
|
2018 |
|
Revenues |
$ |
10,241 |
|
|
$ |
13,744 |
|
|
$ |
20,044 |
|
|
$ |
26,822 |
|
| Costs and expenses: |
|
|
|
|
|
|
|
|
Direct operating (excludes depreciation and amortization shown
below) |
4,087 |
|
|
3,616 |
|
|
7,699 |
|
|
7,041 |
|
|
Selling, general and administrative |
4,988 |
|
|
6,487 |
|
|
10,837 |
|
|
13,030 |
|
|
Provision for doubtful accounts |
56 |
|
|
1,067 |
|
|
326 |
|
|
1,132 |
|
|
Depreciation and amortization of property and equipment |
1,609 |
|
|
2,076 |
|
|
3,383 |
|
|
4,165 |
|
|
Amortization of intangible assets |
594 |
|
|
1,395 |
|
|
1,589 |
|
|
2,790 |
|
| Total operating expenses |
11,334 |
|
|
14,641 |
|
|
23,834 |
|
|
28,158 |
|
| Loss from operations |
(1,093 |
) |
|
(897 |
) |
|
(3,790 |
) |
|
(1,336 |
) |
|
Interest expense, net |
(1,813 |
) |
|
(2,572 |
) |
|
(4,095 |
) |
|
(5,267 |
) |
|
Other expense, net |
(155 |
) |
|
(18 |
) |
|
(168 |
) |
|
(28 |
) |
| Loss from operations before
income taxes |
(3,061 |
) |
|
(3,487 |
) |
|
(8,053 |
) |
|
(6,631 |
) |
| Income tax expense |
(27 |
) |
|
— |
|
|
(74 |
) |
|
(139 |
) |
| Net loss |
(3,088 |
) |
|
(3,487 |
) |
|
(8,127 |
) |
|
(6,770 |
) |
| Net income (loss) attributable
to noncontrolling interest |
(7 |
) |
|
8 |
|
|
(1 |
) |
|
24 |
|
| Net loss attributable to
controlling interests |
(3,095 |
) |
|
(3,479 |
) |
|
(8,128 |
) |
|
(6,746 |
) |
| Preferred stock dividends |
(89 |
) |
|
(89 |
) |
|
(178 |
) |
|
(178 |
) |
| Net loss attributable to
common stockholders |
$ |
(3,184 |
) |
|
$ |
(3,568 |
) |
|
$ |
(8,306 |
) |
|
$ |
(6,924 |
) |
| Net loss per Class A common
stock attributable to common stockholders - basic and diluted: |
|
|
|
|
|
|
|
|
Net loss attributable to common stockholders |
$ |
(0.08 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.21 |
) |
|
$ |
(0.18 |
) |
|
Weighted average number of Class A common stock outstanding: basic
and diluted |
41,439,520 |
|
|
37,696,256 |
|
|
39,903,778 |
|
|
37,667,934 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Following is the reconciliation of our
consolidated net loss to Adjusted EBITDA:
| |
|
| |
Three Months EndedSeptember 30, |
| ($ in
thousands) |
2019 |
|
2018 |
|
Net loss |
$ |
(3,088 |
) |
|
$ |
(3,487 |
) |
|
Add Back: |
|
|
|
|
Income tax expense |
27 |
|
|
— |
|
|
Depreciation and amortization of property and equipment |
1,609 |
|
|
2,076 |
|
|
Amortization of intangible assets |
589 |
|
|
1,395 |
|
|
Interest expense, net |
1,818 |
|
|
2,572 |
|
|
Other expense, net |
296 |
|
|
18 |
|
|
Stock-based compensation and expenses |
178 |
|
|
317 |
|
|
Net loss attributable to noncontrolling interest |
(7 |
) |
|
8 |
|
| Adjusted EBITDA |
$ |
1,422 |
|
|
$ |
2,899 |
|
| |
|
|
|
|
Adjustments related to the Cinema Equipment Business |
|
|
|
|
Depreciation and amortization of property and equipment |
$ |
(1,491 |
) |
|
$ |
(1,942 |
) |
|
Amortization of intangible assets |
(12 |
) |
|
(12 |
) |
|
Stock-based compensation and expenses |
— |
|
|
— |
|
|
Income from operations |
(917 |
) |
|
(3,206 |
) |
| Adjusted EBITDA from
non-cinema equipment business |
$ |
(998 |
) |
|
$ |
(2,261 |
) |
| |
|
|
|
|
|
|
|
Adjusted EBITDA
Following is the reconciliation of our
consolidated net loss to Adjusted EBITDA:
| |
|
| |
Six Months EndedSeptember 30, |
| ($ in
thousands) |
2019 |
|
2018 |
| Net loss |
(8,127 |
) |
|
(6,770 |
) |
|
Add Back: |
|
|
|
|
Income tax expense |
74 |
|
|
139 |
|
|
Depreciation and amortization of property and equipment |
3,383 |
|
|
4,165 |
|
|
Amortization of intangible assets |
1,589 |
|
|
2,790 |
|
|
Interest expense, net |
4,095 |
|
|
5,267 |
|
|
Other expense, net |
759 |
|
|
28 |
|
|
Stock-based compensation and expenses |
189 |
|
|
403 |
|
|
Net loss attributable to noncontrolling interest |
(1 |
) |
|
24 |
|
|
Adjusted EBITDA |
$ |
1,961 |
|
|
$ |
6,046 |
|
| |
|
|
|
|
Adjustments related to the Cinema Equipment Business |
|
|
|
|
Depreciation and amortization of property and equipment |
$ |
(3,137 |
) |
|
$ |
(3,902 |
) |
|
Amortization of intangible assets |
(23 |
) |
|
(23 |
) |
|
Stock-based compensation and expenses |
7 |
|
|
— |
|
|
Income from operations |
(2,050 |
) |
|
(6,929 |
) |
| Adjusted EBITDA from
non-cinema equipment business |
$ |
(3,242 |
) |
|
$ |
(4,808 |
) |
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